Fundamental Analysis: Qualitative Factors

Qualitative factors represent every aspect of a company and are almost impossible to quantify. It often goes unnoticed but when investing you have to go back to the basics and look at the less tangible characteristics of a company. Before you look at any financial statements ask yourself these questions:

Fundamentals – What is the Companies Business? Is it Sound? Is it Growing?

Market Share – By understanding what your companies market share is can tell you a lot about a company. This can help you factor in if it’s the largest player. It can also be a catalyst in protecting current/future earnings. When the firm is bigger than the rest of its rivals, it is in a better position to absorb the high fixed costs of a capital-intensive industry.

Industry Growth – You have to fully analyze the industry your company is in. Examine whether or not the overall market will grow and what its potential is? Consider how supply and demand will change and how prices will fluctuate.

Regulation – How will your companies industry be regulated? What affects could this have long-term and short-term?

Competition – Always got to know the competition? Who is ahead or behind you? How they can affect your future earnings/market share. Whether or not they will affect your pricing power?

Price History – How much have other investors been willing to pay for the stock?

Price Target – How much are investors likely to pay for the stock in the future?

Catalysts – What catalysts will change investor perceptions of the stock in the future?